ITO, BARAN V. BARAN KENDRIYA SAHAKARI BANK LTD., BARAN

ITA 164/JPR/2014

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2185 (ITAT-JAIPUR)
• Duration Of Justice: 3 year(s) 10 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-01-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 03-03-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: A S NEHRA
• Assessee Lawyers: MARY JANE CA DHK
• Section: 143(3)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 164/JP/2014 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2008-09 INCOME TAX OFFICER, BARAN CUKE VS. BARAN KENDRIYA SAHAKARI BANK LTD., STATION ROAD, BARAN. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAALB 0443 J VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI A.S. NEHRA (JCIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : MISS MARY JANE (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 09/01/2018 MN?KKS'K.KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 12/01/2018 VKNS'K@ ORDER PER: VIJAY PAL RAO, JM THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST TH E ORDER DATED 19/12/2013 OF LD. CIT(A), KOTA, ARISING FROM THE PE NALTY ORDER PASSED U/S 271(1)(C) OF THE INCOME TAX ACT, 1961 FOR THE ASSES SMENT YEAR 2008-09. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS IN THIS AP PEAL:- 1. DELETING PENALTY OF RS. 10,68,605/- IMPOSED UPO N THE ASSESSEE U/S 271(1)(C) OF THE ACT. 2. THE APPELLANT CRAVES LIBERTY TO RAISE ADDITIONA L AGROUND AND TO MODIFY/AMEND THE GROUND OF APPEAL AT THE TIME OF HE ARING. 2. WE HAVE HEARD THE LD. D/R AS WELL AS LD. AR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE FILED IT S RETURN OF INCOME ON 2 ITA NO. 164/JP/2014 BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. 20/09/2018 DECLARING NIL INCOME. THE ASSESSEE CLAI MED THE BENEFIT OF SECTION 80 P OF THE INCOME TAX ACT. DURING THE COURSE OF S CRUTINY ASSESSMENT, THE ASSESSING OFFICER DENIED THE CLAIM OF SECTION 80 P IN RESPECT OF RS. 1,41,187/- AND ALSO DISALLOWED THE PROVISION FOR ASSESSEES GR ATUITY U/S 40A(7) OF THE INCOME TAX ACT OF RS. 2,09,894/-. THE ASSESSING OF FICER HAS ALSO DISALLOWED THE CLAIM OF PROVISION FOR PACS MANAGER SALARY FUND OF RS. 30 LACS AND CLAIM OF PACS DEVELOPMENT FUNDS OF RS. 3,41,950/- FOR WAN T OF ANY EVIDENCE OR SUPPORTING DOCUMENTS. SIMILARLY, THE AO ALSO DISAL LOWED THE CLAIM OF AUDIT FEE TO THE EXTENT OF RS. 20,400/- AND CLAIM OF FBT OF RS. 25,238/-, TOTAL AMOUNTING TO RS. 37,38,670/-. THE SAID DISALLOWANCE S/ADDITIONS MADE BY THE AO FOR THE ASSESSMENT COMPLETED U/S 143(3) WAS ALSO CONFIRMED BY THE LD. CIT(A) TO THE EXTENT OF RS. 34,58,270/-. THUS, THE LD. CIT(A) IN THE QUANTUM PROCEEDINGS ALLOWED THE CLAIM OF THE ASSESSEE TO TH E EXTENT OF RS. 2,80,400/- IN RESPECT OF PACS MANAGER SALARY FUND. THE AO INI TIATED THE PENALTY PROCEEDINGS U/S 271(1)(C) AND LEVIED A PENALTY OF R S. 10,68,605/- WHICH IS 100% OF TAX SOUGHT TO BE EVADED ON THIS AMOUNT OF R S. 34,58,270/-. THE ASSESSEE CHALLENGE THE ACTION OF THE AO BEFORE THE LD. CIT(A) AND RELIED UPON THE DECISION OF THE HONBLE SUPREME COURT IN THE CA SE OF PRICE WATERHOUSE COOPERS PVT. LTD. VS. CIT 348 ITR 306 AND CONTENDED THAT ALL THE CLAIMS WERE MADE BY THE ASSESSEE AS PER BONA FIDE BELIEF AND EV EN IF SOME OF THE CLAIMS ARE NOT ALLOWABLE AS PER THE PROVISION OF LAW, THE SAME ARE DUE TO BONA FIDE 3 ITA NO. 164/JP/2014 BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. AND INADVERTENT ERROR WHICH COULD NOT BE DETECTED E VEN BY THE AUDITOR OF THE ASSESSEE BANK. THE ASSESSEE CONTENDED THAT A DEDUC TION U/S 80 P WAS WITHDRAWN AS PER THE AMENDMENT IN THE PROVISION WIT H EFFECT FROM 1.4.2007 APPLICABLE FOR THE A.Y. 2008-09. HOWEVER, THE AUDI TOR OF THE ASSESSE OVERLOOKED THIS AMENDMENT WHICH HAS RESULTED THE MI STAKE IN CLAIMING THE DEDUCTION U/S 80 P UNDER BONA FIDE BELIEF OF THE AS SESSEE THAT THE ENTIRE INCOME WAS EXEMPTED U/S 80 P OF THE ACT. SIMILAR C ONTENTIONS WERE RAISED BY THE ASSESSEE IN RESPECT OF THE OTHER CLAIMS AND THU S, THE ASSESSEE EXPLAINED BEFORE THE LD. CIT(A) THAT THE ASSESSEE BEING A COO PERATIVE BANK HAS CLAIMED THE DEDUCTION U/S 80P DUE TO BONA FIDE BELIEF AND I NADVERTENT MISTAKE WITHOUT ANY INTENTION TO AVOID THE TAX ON THE INCOME. THE ASSESSEE FURTHER SUBMITTED THAT THOUGH THE AUDITOR IN THE AUDIT REPORT RAISED THE OBJECTION THAT THE AMOUNT OF RS. 23 LACS TOWARDS PROVISION OF GRATUITY WAS NOT ALLOWABLE U/S 40A(7) HOWEVER, IN COMPUTATION OF INCOME, THE SAID AMOUNT WAS NOT DISALLOWED DUE TO OVERSIGHT AND MISTAKE OF OMITTING THE SAID CLAIM. THE ASSESSEE FILED RETURN OF INCOME ALONG WITH THE AUDI T REPORT THEREFORE, THERE WERE NO CONCEALMENT OF PARTICULARS OF INCOME OR FUR NISHED INACCURATE PARTICULARS OF INCOME. IT IS ONLY BECAUSE OF INADV ERTENT ERROR THE ASSESSEE COULD NOT ADDED BACK THE SAID AMOUNT OF RS. 23 LACS CLAIM TOWARDS PROVISION OF GRATUITY. AS REGARDS THE DISALLOWANCE WHICH WAS CONFIRMED BY THE LD. CIT(A) OF RS. 27,19,600/- TOWARDS PACS MANAGER SALA RY FUND THE ASSESSEE 4 ITA NO. 164/JP/2014 BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. ACCEPTED THAT THE PROVISION IS NOT ALLOWABLE CLAIM UNDER THE INCOME TAX ACT HOWEVER, IT WAS A MISTAKE DUE TO NEGLIGENCE OF BANK S LEGAL ADVISOR AND WITHOUT ANY INTENTION TO AVOID TAX. SIMILARLY, TH E ASSESSEE EXPLAINED THAT THE AMOUNT OF RS. 3,41,950/- FOR PACS DEVELOPMENT FUND WAS CLAIMED BECAUSE OF MISTAKE AND NEGLIGENCE ON THE PART OF THE BANKS LEGAL ADVISOR WITHOUT ANY INTENTION OF AVOIDING THE TAX. THUS, IT IS CLEAR TH AT THE ASSESSEE HAS EXPLAINED REASONS SUCH AS BONA FIDE MISTAKE OR NEGLIGENCE ON THE PART OF THE LEGAL ADVISOR FOR VARIOUS CLAIMS WHICH WERE NOT ALLOWABLE UNDER THE PROVISION OF THE ACT AND DISALLOWED BY THE AO WHILE COMPLETING THE A SSESSMENT. 3. LD. AR OF THE ASSESSEE HAS REITERATED THE CONTEN TION AS PLACED BEFORE THE LD. CIT(A) WHEREAS THE LD. D/R HAS SUBMITTED TH AT EXCEPT THE CLAIM OF 80 P ALL OTHER CLAIMS MADE BY THE ASSESSEE CANNOT BE A CCEPTED AS BECAUSE BONA FIDE BELIEF AND INADVERTENT MISTAKE. IT IS NOT A C ASE OF ISOLATED MISTAKE BUT THE ASSESSEE HAS MADE AS MANY AS 6 CLAIMS WHICH WER E NOT ALLOWABLE AS PER THE PROVISION OF ACT AND THEREFORE THE ASSESSEE CAN NOT TAKE THE ADVANTAGE OF MAKING IMPERMISSIBLE CLAIM. HE HAS RELIED UPON THE ORDER OF THE AO PASSED U/S 271(1)(C). 4. HAVING CONSIDERED THE RIVAL SUBMISSIONS AND GIVI NG A DEEP THOUGHT OVER THE EXPLANATION OF THE ASSESSEE THAT THE CLAIMS WER E MADE BECAUSE OF BONA FIDE BELIEF AND INADVERTENT MISTAKE ON THE PART OF THE LEGAL ADVISOR/CA OF THE ASSESSEE BANK WE FIND THAT THE ASSESSEE CLAIMED THE DEDUCTION U/S 80P 5 ITA NO. 164/JP/2014 BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. HOWEVER, THE SAID BENEFIT IS NOT AVAILABLE TO THE A SSESSEE IN VIEW OF THE AMENDMENT IN SECTION 80 P OF THE ACT W.E.F 1.4.2007 . SIMILARLY, THE ASSESSEE HAS MADE VARIOUS CLAIMS WHICH WERE NOT ALLOWABLE UN DER THE PROVISION OF THE ACT. THE DETAILS OF THE ADDITIONS MADE BY THE AO AN D CONFIRMED BY THE LD. CIT(A) IN THE QUANTUM PROCEEDING AS REPRODUCED BY T HE AO IN THE ORDER PASSED U/S 271(1)(C) AN AS UNDER:- S.NO. DETAILS OF ADDITIONS AMOUNT OF ADDITIONS RELIEF ALLOWED BY CIT(A) ADDITIONS CONFIRM 1 REJECTED CLAIMED DEDUCTION U/S 80 P RS. 141187 NIL RS. 141187 2 REJECTED CLAIMED DEDUCTION U/S SUB. (7)(A) OF SECTION 40A PROVISION OF GRATUITY RS. 209894 NIL RS. 209894 3 REJECTED CLAIM OF PROVISION FOR PACS MANAGER SALARY FUND RS. 30,00,000 280400 RS. 2719600 4. PACKS DEVELOPMENT FUND RS. 341950 NIL RS. 341950 5. EXCESS CLAIM OF AUDIT FEES. RS. 20400 NIL RS. 20400 6. REJECTED CLAIM OF FBT DEBIT IN P&L A/C. RS. 25238 NIL RS. 25238 TOTAL RS. 3738670 NIL RS. 3458270 IT IS APPARENT FROM THE NATURE OF THE CLAIM MADE BY THE ASSESSEE EXCEPT THE CLAIM OF DEDUCTION U/S 80 P THAT NONE OF THE OTHER CLAIMS CAN BE CLASSIFIED AS THE CLAIM ON WHICH THE ASSESSE COULD HAVE A BONA FI DE BELIEF ABOUT THE 6 ITA NO. 164/JP/2014 BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. ALLOWABILITY AND THEREFORE ALL OTHER CLAIMS MADE BY THE ASSESSEE IN THE RETURN OF INCOME CANNOT BE REGARDED AS A BONA FIDE CLAIM B Y THE ASSESSEE DUE TO INADVERTENT MISTAKE OF THE BANKS LEGAL ADVISOR. I T IS NOT AN ISOLATED CLAIM OF DEDUCTION AND EXPLAINING A REASON WHICH CAN BE REGA RDED AS BONA FIDE EXPLANATION UNDER THE PROVISION OF SECTION 271(1)(C ) BUT THERE ARE VARIOUS CLAIMS WHICH ARE ABSOLUTELY NOT PERMISSIBLE UNDER P ROVISION OF THE ACT. SOME OF THE CLAIMS ARE EVEN THE DEDUCTION OF EXCESS AMOU NT MADE BY THE ASSESSEE AND OTHERS ARE STRICTLY PROHIBITED UNDER THE ACT. T HE CLAIM OF DEDUCTION U/S 80P CAN BE CONSIDERED ON BONA FIDE BELIEF BECAUSE O F THE PECULIAR REASONS THAT THIS IS A FIRST ASSESSMENT YEAR AFTER THE AMEN DMENT IN THE PROVISION OF SECTION 80 P WHEREBY THE BENEFITS OF DEDUCTION U/S 80 P WAS WITHDRAWN FROM THE CO-OPERATIVE BANKS. ACCORDINGLY, WE ARE OF THE CONSIDERED VIEW THAT THE DECISION IN CASE OF PWC VS. CIT (SUPRA) CAN BE APPL IED ONLY IN RESPECT OF THE CLAIM OF DEDUCTION U/S 80 P OF THE IT ACT AND NOT I N RESPECT OF THE OTHER CLAIMS. AS APPARENT FROM THE RECORD, THAT THE ASSES SEE HAS MADE SOME CLAIMS DESPITE THE AUDITOR OF THE ASSESSEE RAISED SPECIFIC OBJECTION ABOUT THE ALLOWABILITY OF THESE CLAIMS. ACCORDINGLY, WE CONF IRM THE DELETION OF THE PENALTY IN RESPECT OF THE DISALLOWANCE OF DEDUCTION U/S 80P OF RS. 1,41,187/- AND RESTORE THE IMPOSITION OF THE PENALTY U/S 271(1 )(C) IN RESPECT OF REMAINING DISALLOWANCE/ADDITION MADE BY THE AO. 5. IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY A LLOWED. 7 ITA NO. 164/JP/2014 BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. ORDER PRONOUNCED IN THE OPEN COURT ON 12/01/2018. SD/- SD/- HKKXPAN FOT; IKY JKO (BHAGCHAND) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 12/01/2018. POOJA/- VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- INCOME TAX OFFICER, BARAN. 2. IZR;FKHZ@ THE RESPONDENT-. BARAN KENDRIYA SAHAKARI BANK LTD., BARAN. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE [ITA NO. 164/JP/2014] VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR